Friday, January 16, 2009

Ritter Tells Legislators His Ideas For Cuts

Gov. Bill Ritter's budget director told the Joint Budget Committee today that the administration thinks most of the state's expected $600 million budget shortfall this fiscal year can be closed by moving money around.

Todd Saliman said the General Assembly should authorize $289.7 million in diversions and transfers from cash funds to the state's general fund and tap Colorado's emergency reserve for $134.1 million.

Among the cash fund transfers would be $11.9 million in casino revenues.

The remaining $201.1 million needed to close the gap would come from spending cuts.

"The governor's plan is to try to fairly distribute the pain across the entire state government," Saliman said in his comments to the committee, which will recommend measures needed to balance the state's budget to the entire legislature later in the session.

Ritter's office said that most of the spending cuts would come from executive agencies and programs but that more than $34 million should be taken from the state's contribution to the Police and Fire Pension Association of Colorado.

Included among the programs facing spending reductions or elimination is the full-day kindergarten program authorized by the General Assembly last year, which is one of the governor's major educational priorities.

Saliman said that the legislature should eliminate $34.5 million dedicated this year to construction projects relating to full-day kindergarten services.

Other cuts affecting public education would include, if Ritter's suggestions are taken, $4.9 million from charter school construction, $1.8 million from payments to school districts for military dependent enrollment, $1 million from grants that finance alternative teacher compensation plans, and $973,000 from grants to finance summer school programs.

Higher education would take a $30 million hit, which Ritter's office said would nevertheless result in a $90 million increase in spending on colleges and universities since the beginning of FY 2007.

The governor's goal of increasing health insurance coverage to low-income children would suffer a significant setback as well, as Saliman told the committee that Ritter's plan would drop the planned expansion of Children’s Basic Health Plan (CHP) eligibility from 205 percent of the federal poverty level to 225 percent of that benchmark for children and pregnant women. This cut would save $3.1 million this year and $13.6 million next year, according to a press release issued by the governor's office.

The balancing plan also would reduce various health care provider rates, saving $21.7 million.

Ritter will also ask the legislature to cap the amount of sales tax revenues businesses can keep to cover expenses at $5,000. Under current law vendors are allowed to retain 3.5% of sales tax revenues. Saliman said this change would affect 1.9% of the state's businesses and save the general fund $12.8 million.

The governor on Oct. 1 instituted a limited executive branch hiring freeze and suspended ongoing construction projects financed by the general fund. The governor's office says those actions have thus far saved the state $62.5 million.

Saliman said the governor would freeze an additional 64 construction projects, saving an additional $43.4 million.

The budget director also said that Ritter suggests avoidance of reductions in the state's emergency reserve and cancellation of diversions and transfers from cash funds if Congress enacts a federal financial bailout plan for states in the coming months.

Ritter acknowledged today that the choices available to lawmakers are less than ideal.

“My top priorities will be protecting life, safety and public health, ensuring that we are able to meet our safety-net obligations, and that we try to preserve much of the progress we’ve made in areas such as higher education the past two years,” Ritter said. “There will be no more challenging task this legislative session than responsibly, thoughtfully and collectively balancing the budget. Colorado’s budget has always been frugal and tight, and our options are much more limited than during the last recession."

Ritter's recommendations for closing the shortfall expected in FY 2009 are to be presented Jan. 23, according to a press release issued by the governor's office.